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wiifm said:
It's unlikely that the size of the Blu-Ray diode makes the PS3 look as-is ....



Exactly correct. The BD has nothing to do with the PS3's size -- it's all about heat dissipation. If you cram powerful CPU/GPUs into a small case with insufficient airflow, you'll have serious heat problems.

As the PS3 becomes relatively weak (compared to current technology) and the manufacturing processes for the chips/memory continue to shrink, Sony will have an opportunity to make it smaller. But that time isn't just around the corner.

Not likely in 2008.